The e-commerce company reports a 25 percent decrease in turnover. During the year, turnover landed at 26.8 million Swedish kronor, compared to 35.3 million Swedish kronor the previous year. Operating profit decreased from 3.6 million Swedish kronor to a loss of 298,000 Swedish kronor.
One of the reasons for this development is that the company has been subjected to fraud.
One of Merchsweden's suppliers allegedly received an advance payment and then disappeared, leaving the EU. The company also inadvertently purchased luxury goods that turned out to be stolen, resulting in further financial losses.
“First and foremost, it’s disappointing to see the first red figures, but not entirely unexpected as we were subjected to several quite brutal frauds last year,” says CEO Fredrik Rinaldo to the website.
Suspended from the platform
In addition to the purchasing problems, the e-commerce company encountered obstacles in its sales channels.
At the end of 2024, Instagram shut down the company's account following a copyright infringement report from the luxury conglomerate LVMH. At the time, the account was the company's second-largest sales channel with 150,000 followers.
The company had to start a new account, which currently has around 22,700 followers. This event has led the company to partially redirect its marketing from organic reach to paid content to reduce future risks.
At the same time, sales were affected by lower purchasing willingness among customers as inflation increased. This led to an increase in inventory from 5.4 million Swedish kronor to 6.2 million Swedish kronor, meaning that capital is now tied up in unsold products that may be difficult to sell at regular prices.
New strategy and fewer employees
To adapt to the new economic situation, the company has halved its workforce, from four full-time employees to two.
To turn the tide, the e-commerce company has also developed an action plan. This includes launching its own brands and expanding the range from sneakers only to also include watches, bags and art. The company is also focusing on bringing new brands to Sweden and the EU with exclusive rights.
“The strategy going forward is to continue testing and developing new product categories and brands. The goal is to build a more stable and long-term business that is less dependent on short-term trends and therefore easier to plan and scale,” says Fredrik Rinaldo.